Chinese imports put squeeze on Syrian merchants

Chinese imports put squeeze on Syrian merchants (Thanks Ehsani)
11 Dec, 2007, AGENCIES DAMASCUS:
Economic Times

Syrian tailor Adel looked around at the sewing machines lying silent inside his once-thriving shop in Damascus and wondered whether this month's books would balance. He was forced to sack six of his eight staff in October in yet another example of the financial pressure put on Syria's small manufacturers by the influx of cheap Chinese imports. I couldn't carry on piling up these losses," he explained to AFP. "I used to make jackets at a cost price of around 900 (Syrian) pounds (18 dollars). Now you can find jackets at the market made in China which are a third of the price."

The phenomenon of cheap Far East-manufactured products putting the squeeze on small producers has long been recognised in the West, but is a new shock for Syrian manufacturers.

"Dozens of small workshops have been forced to close," the private weekly newspaper Al-Borsat Wal-Aswak said on December 2.

It denounced the "greed" of large traders who were growing rich at the expense of small shops, which are unable to compete with Chinese low prices.

"They make up to 400 percent profits. They flood the markets with Chinese products" without a thought for the social consequences, said the paper.

Scores of street stalls have sprung up under the banner of "Chinese Markets" throughout Damascus's commercial district, offering everything from arts and crafts items to hi-tech goods.

"For some, these products are synonymous with fashion, for others they are just junk," said George, a civil servant, delighted to see that his 250-dollar salary now allows him to splash out on a few extra luxuries.

It has become impossible to escape the power of the "Made in China" production steamroller. Chinese products have swept into every sector of Syrian commerce, including traditional craft goods.

"The Chinese copy everything. They make shoddy goods which people buy because they are cheap," said a trader on Kassaa Street, a commercial hub at the hear of the Christian district of Damascus.

Traces of the Chinese takeover during the Christmas period are to be found everywhere.

Shelves are full of garlands, silver-plated candles, gilded cherubs and Christmas tree baubles. And nothing seems to be without the tiny "made in China" sticker.

The arrival of this merchandise onto the Syrian market is relatively recent.

Damascus only approved Chinese imports in 2000, said a shopkeeper in Al-Harir silk souk where the precious fabric is slowly being replaced by plastic flowers and Chinese fakes.

And the future for China in Syria looks no less rosy. According to a Chinese diplomat the balance of trade between the two countries amounted to 1.7 billion dollars in 2007, of which only 100 million dollars was made up of exports from Syria to China.

Comments (9)


1. norman said:

Joshua,

This is interesting for your readers.

Syrian activists set to be freed
By Lina Sinjab
BBC News

The Syrian authorities are expected to release the final members of a leading human rights group who were recently rounded up.
There was no explanation for the detentions on Sunday, the eve of the International Day for Human Rights.

About 30 members of the Damascus Declaration for Democratic Change were detained after a meeting they held in the Syrian capital on Saturday.

Most activists were released a few hours after the arrest.

Public gatherings by the group have been banned, and Sunday’s arrest appeared to be an attempt by the Syrian authorities to enforce that rule.

The detention follows a meeting by 168 human rights activists on Saturday, at which they called for gradual and peaceful democratic change in Syria.

A leading member of the group told the BBC after his release that the move was a message to weaken the Syrian opposition movement.

When President Bashar al-Assad came to power in 2000, he raised hopes for democratic reform by releasing hundreds of political prisoners.

Repression soon followed however, seriously limiting the freedom of opposition in Syria.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/middle_east/7138757.stm

Published: 2007/12/11 16:16:33 GMT

© BBC MMVII

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December 12th, 2007, 2:13 am

 

2. norman said:

The Syrian consumers are the winners with free trade , lower prices makes it easier for them to make ends meet , Syrian traders and merchants should try to buy from China and sell to other countries and invest the profit in Syria to make things China can not make .

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December 12th, 2007, 2:45 am

 

3. AnotherIsraeliGuy said:

If indeed the hope of the Syrian economy is to develop manufacturing based on low cost wages as was “explained” to me in previous posts, then opening the market to cheap Chinese imports makes no sense. Yes, it is good short term, but it will undermine any new manufacturing industry. Is Syria capable to jump from an agriculture and oil based industry to a service based industy directly? Given the low education standards and lack of English knowledge in Syria I think not. But hey, what do I know?

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December 12th, 2007, 2:55 am

 

4. Syrian said:

Norman,

The per capita GDP in China is higher than that of Syria which means that labor is relatively more expensive in China. The difference is in the factories. While a Chinese manufacturer might employ 10 people for every machine, a Syrian counterpart employs 20 people for each machine (just as an example) which means the total cost of labor is higher in Syria than it is in China. The opening of the market to Chinese imports should have the effect of increasing the need for machines in the Syrian economy to keep manufacturers more competitive. The Syrian problem is what the government is doing, or going to do, about the high tariffs they place on the import of machines. If the government retains the high tariffs then the calculations of the manufacturer may result in a net loss and they would exercise the option of shutting down production completely. However, if the government was to reduce the tariffs (preferably to zero or even subsidize the import), then more local manufacturers will have a profitable calculations of employing more machines (and implementing the training programs needed to run them) and they can be competitive and stay in business. The added machines will add to the productivity of each worker and they would be able to command higher wages….

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December 12th, 2007, 5:45 am

 

5. AnotherIsraeliGuy said:

Syrian,
You forget that the per capita GDP is an average over the population. There are many people that earn below it. There are millions of them in China and it is against them that Syria has to compete.

Second, in order to buy new machines you need foreign capital. You need loans in dollars or euro. It is not just a matter of tarrifs. Are these available to small and medium businesses in Syria?

Third, to operate better and more sophisticated machines you need a different work force, so the unskilled labor may be inappropriate for it. For the new machines you may need technicians or engineers instead of high school graduates.

Fourth, the Chinese are also becoming cheaper and more efficient all the time.

Based on history, what needs to be done is to decide on a few industries to protect and grow them until they become competitive worldwide (you need a big enough home market though). This is what Japan did for example. This is what Syria has to do. But apparently the regime has opened the market indiscriminately and this could be a disaster.

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December 12th, 2007, 5:59 am

 

6. Syrian said:

AIG,

There are many people who earn below the per capita GDP in Syria as well, millions of them.

Why do you need foreign capital to buy new machines and not to buy new cars? You need capital (domestic will do just fine). There is something called a currency market in which you can trade Syrian Liras for Dollars or Euros. You are falling in the same trap lots of people fail to see, that you would not be able to borrow because the nation is poor. Investors invest in projects and their money and credit will flow to wherever there is a profitable return (even to Syria). Now, if you want to argue that some industry is not going to be profitable for investors then I would say you need to provide the numbers. You know these as well as I do. The best evaluation comes from the investors themselves. If no one want to invest in the textile industry in Syria, then I say shut it down, it is not where Syria would have an advantage.

Third, A more skilled workforce is the result of need for a more skilled workforce not the other way around. You do not train the workforce for industries in which they have no use. Syria can train all the airplane designers they want, they will never have an airplane industry because the resources are not suited for that (just an example don’t come back and ask me how I know that).

my … at the end of my comment was intended to signify the start of a cycle of

1. we need machines to compete so we buy the machines
2. we need more skilled labor to operate the machines so we train the labor
3. we need qualified technicians to maintain the machine, so we train technicians.

Of course this is not an overnight deal. It is a process that must start in order to have any effect.

How do you convince a $100 a month janitor to leave his job and come train to be a machine operator? Offer him $125 a month. How do convince a $300 a month car mechanic to become a machine technician offer her $350.

Fourth,

The Chinese are becoming cheaper because their labor is becoming more expensive and they are replacing labor with more sophisticated (and more efficient) technology.

Your recommendation of picking industries to protect and develop and industry (or a small set of industries) is, well, nonsense. Which industries would you pick? Why protect textiles but not protect glass making or shoe manufacturing? How long do you protect them for? How about if they do not become competitive worldwide in the prescribed timeframe? As the protected industry becomes more and more wealthy they will be sure to accumulate political power to protect their wealth.

The basic solution (over time) is for the government to stop trying to plan the economy, remove barriers to trade and eliminate the internal system of subsidies and price controls and stick to the task of providing infrastructure. Let the ingenuity of the Syrian people lead the economy out of the mess decades of government intervention has created. And if we are not ingenious enough to grow our economy then I will be the first to say we deserve out lot.

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December 12th, 2007, 6:44 am

 

7. norman said:

Syrian ,
I agree with you ,
I listened to Greenspan book on CD recently and what he said is the the turn around in China’s economy was when the govenment lifted tarriff on importation of machines and raw materials needed for production , I hope Syria will move that way.

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December 12th, 2007, 2:45 pm

 

8. AnotherIsraeliGuy said:

Syrian,
Your “sink or swim” plan is risky but has some chance of success. The upside is what you describe, the downside is huge unemployment and a widening gap between rich and poor that may lead to instability. In any case, Asad the Wise will make the decision.

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December 12th, 2007, 2:51 pm

 

9. Syrian said:

AIG,

What you describe as the downside is the status quo!!

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December 12th, 2007, 3:40 pm

 

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